By Jon O’Sullivan
Every ambulatory surgery center (ASC) is different. Geographical markets present varying managed-care issues; the mix of physicians in an ASC drives a myriad of issues, including size, equipment, staffing, etc.; and the participation of a corporate partner will determine if a hospital or management company will affect the structure and governance of the ASC. As a result, developing an ASC is by no means a “cookie cutter" process. Without the proper guidance, the process can be filled with pitfalls. This article provides some guidance on the issues and approaches that should be considered in order to avoid some of those pitfalls. To best address the most relevant issues in today’s market, let’s focus on the process from the perspective of physicians in a hospital-partnered ASC.
ALIGNED OBJECTIVES
The success of the development of an ASC through a partnership comprised of a hospital partner and physician partners is predicated on ensuring that all parties have aligned long-term objectives. In most – if not all – cases, the driving force of the development of an ASC is the economic desire of physicians who are attempting to combat a declining reimbursement environment. Conversely, in most cases, the hospital is responding to these forces in a defensive manner by partnering with the physicians to preserve the physician relationship and retain as much economic involvement as possible.
For physicians, key questions to ask when considering partnering with the hospital include the following:
- Based on the location, does creating an ASC have a serious negative impact on the community hospital; and would the development of an ASC have a dire impact on the relationship between the physicians and the hospital?
- Based on the market for managed care contracting, is having a hospital partner with managed care leverage a critical factor in the long-term success of the ASC?
- Are the physicians willing to partner with the hospital at a level (generally, greater than 50 percent ownership) that affords the hospital the ability to use its market leverage?
- Would a partnered relationship with the hospital provide better long term success for the ASC by avoiding a variety of competitive responses?
- Does the hospital have a track record of pursuing collaborative relationships with physicians?
- Will hospital involvement serve to attract additional physicians and case volume?
- Do the physicians want the hospital involved in any aspect of the management of the ASC?
For the hospital responding to the opportunity to partner in an ASC opportunity with physicians, key issues to address include:
- Does hospital administration have a true desire to participate with physicians in an ASC?
- Will the development of the ASC be strategically positive for the hospital?
- Does the ASC venture represent an opportunity to capture additional market share, or is it a purely defensive response?
- Do the physicians understand the regulatory and legal boundaries which define the parameters of a hospital’s ability to participate?
- Does the hospital want to participate in the management of the ASC, and if so, to what level?
Assuming that these questions are fully evaluated and the consensus of both the physicians and the hospital is to proceed in a relationship, the next step is to define the process by which both parties will move forward. Generally, the formation of a working group comprised of both physician and hospital leaders is the first steptowards addressing the numerous issues that will define the relationship. An effective working group can provide a number of benefits. It can help to:
